Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 105.817 | EURUSD 1.10254 | AUDUSD 0.74936 | NZDUSD 0.69891 | USDCAD 1.30874 | USDCHF 0.9858 | GBPUSD 1.32304 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.10340 | 1.10184

USDJPY                 106.271 | 105.595

GBPUSD               1.32533 | 1.32136

AUDUSD              0.75087 | 0.74622

USDCHF               0.98601 | 0.98454

USDCAD               1.31151 | 1.30738

NZDUSD               0.70146 | 0.69749

EURGBP               0.83416 | 0.83260

EURJPY                 117.146 | 116.404

EURCHF                1.08756 | 1.08591

 

For Today

• EUR: A very quiet day for the Euro with limited buying through the first half of the session to take the market towards the 1.1035 levels however, the gains were steadily eroded and the market drifted back to the 1.1020 levels in steady trading, Topside offers through the 1.1050 levels are likely to be light with weak stops likely to be just above the 1.1060 areas, these are likely to be covered quickly with possible stronger offers from the 1.1080 areas and into the 1.1100 levels with congestive offers then likely to continue through to the better offers into the 1.1180 areas, plenty of data today from Europe and possibly the only thing that could upset. Downside bids light through the 1.1000 levels with the bids likely to be stronger into the 1.1080 areas, weak stops likely through that level however, the closer you get to the 1.0950 areas the stronger the bids are likely to become and those bids are likely to extend to the 1.0900 levels before any downside weakness appears.
• GBP: Having recovered most of the weakness from yesterday the market moved into the Asian session unchanged from the previous day’s opening and started a steady climb to the 1.3250 levels through the early part of Tokyo however, the market seems pretty quiet and the market drifted from those highs back to the opening levels and into the London session, London session has the European PMI numbers to come and obviously any dip in those numbers will be blamed on Brexit as several European officials blame the UK for their overspending and lack of control on the UK’s irresponsible act, Topside offers through the 1.3270-1.3300 levels are likely to be light and the liquidity issues still remain however, with mixed reaction over the past few weeks there is likely to be better offers through the 1.3300 areas and into the 1.3350 levels before further weakness appears and the market can again test through 1.3400. downside bids into the 1.3150 areas are likely to be light however, as with the topside a move through will likely see stronger bids appearing on a move into the 1.3100 levels.
• JPY: The USDJPY having lost ground yesterday saw limited buying into the pre-Tokyo opening and the USDJPY testing back through the 106.20 levels to make the highs before subsiding and drift back towards the opening levels and a slow drift into the 105.60 levels before finding some support, the market moves into the London session unchanged from the opening and holding the 105.80-90 areas for the bulk of the late part of the session, Topside offers likely to be light through to the 106.20 areas with some offers likely to have moved into the area just above there however, the stronger offers are likely to be forming above the 107.50 areas with any topside move likely to struggle through the area and little data to effect the JPY into London. Downside bids into the 105.50 areas are likely to be light however a move through the area will likely see stronger bids appearing as the market pushes to the 105.20 areas and continuing through the figure before weak stops on a break of the 104.80 areas run into congestive bids to the 104.50 level.
• AUD: A limited Oz session with the recovery yesterday to above the 75 cent level continue into the early part of the session and the market again testing towards the 0.7510 on very little however, once the early push was over with limited AUDJPY buying in the market the Oz started to slip slowly lower and test steadily to the 0.7465 areas before finding bids to support the market, Downside bids into the 0.7460 levels are likely to extend through the 0.7440 areas before weak stops appear, the movement is likely to be dictated by any cross trading through the day with AUDJPY likely to be a strong factor however, I wouldn’t discount EURAUD if the PMI numbers vary from expected, 74 cent will see some strong bids appearing. Topside offers through the 75 cent levels remain and a push above the 0.7520 areas should see weak stops appear and the market pushing back into the mid 0.75 areas and light offers on a run towards the 76 cent level.

Overnight News

USD:

Trump accepts the Republican nomination for President

JPY:

Japan to miss FY 2018 deficit cutting target on tax hike delay: NHK

Yen off 6 week low after “helicopter money” shot down

EUR:

Eurozone banks face problem of weak profitability: ECB Chief

EUR/GBP:

Hollande urges UK to deliver article 50 soon

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

JPY         PMI Manufacturing Jul (P) A 49 | C 48.3 | P 48.1

07:00     EUR        France Manufacturing PMI Jul (P) C 48.1 | P 48.3

07:00     EUR        France Services PMI Jul (P) C 49.6 | P 49.9

07:30     EUR        Germany Manufacturing PMI Jul (P) C 53.6 | P 54.5

07:30     EUR        Germany Services PMI Jul (P) C 53.3 | P 53.7

08:00     EUR        Eurozone Manufacturing PMI Jul (P) C 52.1 | P 52.8

08:00     EUR        Eurozone Services PMI Jul (P) C 52.3 | P 52.8

12:30     CAD       Retail Sales M/M May C 0.00% | P 0.90%

12:30     CAD       Retail Sales Less Autos M/M May C 0.20% | P 1.30%

12:30     CAD       CPI M/M Jun C 0.10% | P 0.40%

12:30     CAD       CPI Y/Y Jun C 1.40% | P 1.50%

12:30     CAD       BoC CPI Core M/M Jun C 0.00% | P 0.30%

12:30     CAD       BoC CPI Core Y/Y Jun C 2.00% | P 2.10%

 

Harry Hindsight              

• EUR: A narrow range considering that the ECB announcement was to come later in the day, the Asian market was reasonably static through the early part of the session trading around the opening 1.1015 levels until late in the session, before pushing through the recent 1.1030 level and triggering some weak stops to the 1.1045 levels before stalling and starting a steady drift into the London session to the opening levels, the ECB announcement to leave everything as it is was no surprise to the market and the questions of negative rates continues in the market, the market did react initially test to the 1.1060 levels however, it remained at the levels only for a short period before the communique saw the market declining as Draghi waiting for evidence that the economic and financial markets deteriorating before taking action, and only 6months ago the market was awash with forward thinking, the market saw some strong selling after the commentary and although the bids remain resilient below the 1.1000 levels the market did push to the 1.0980 areas before bouncing and moving back to the opening levels for the close.
• GBP: Opening around the 1.3220 levels the market tested higher as the Tokyo session saw the results of the Employment data taking the market quickly through to the 1.3270 areas before drifting back off to the opening levels, the move towards the London session saw early Europeans quietly buying to test the topside again however the move into the London session saw the gains quickly disappear as a worse than expected Retail Sales number was released, this had largely been reported through the week with the post Brexit vote still worrying the average shopper so no great surprise really however, the market did react quickly and the Cable dropped back to the 1.3150 levels in a quick move before bouncing back to the 1.3200 level and gradually grinding through the session to be pretty much unchanged on the day.
• JPY: Talk of large easing through the session including some type of helicopter funding saw the market pushing above the 107.40 levels and drifting from that level eventually back to the 107.00 levels for the move into the London session, the combination of the UK employment data helped with the initial test higher however, once the market moved into the London session the GBPJPY longs were caught after the release of the retail sales data, add to which Kuroda’s comments to the press saw the market quickly drop back as the London session sold heavily and the USDJPY quickly pushed to the 105.40 areas, the market has heard the easing stories before and it would seem is less inclined to buy the rumour however, from the lows the market bounced on an over enthusiastic move and pushed back to above the 106.00 levels before settling back to trade quietly around the 105.80 areas to the close.
• AUD: A very quiet session for the Oz with the market drifting lower in the early part of the session to test the 0.7460 levels as a consequence of the strong USDJPY, the market traded quietly through to mid-session however, late into the session the Oz caught stronger buying in crosses and pushed quickly through to the 75 cent levels before finding sufficient offers to hold through to the London session, with a steady move towards the 0.7515 levels the range was defined for the day and the market held around the 0.7495 levels through to the close.

Yesterday’s premiership results

AUD       NAB Business Confidence Q2 A 2 | P 4

JPY         All Industry Activity Index M/M May A -1.00% | C -1.00% | P 1.30% | R 0.80%

CHF        Trade Balance (CHF) Jun A 3.55B | C 3.49B | P 3.78B

GBP       Retail Sales M/M Jun A -0.90% | C -0.40% | P 0.90%

GBP       Public Sector Net Borrowing (GBP) Jun A 7.3B | C 9.3B | P 9.1B

EUR        ECB Rate Decision A 0.00% | C 0.00% | P 0.00%

EUR        ECB Press Conference

CAD       Wholesale Sales M/M May A 1.80% | C 0.30% | P 0.10% | R 0.20%

USD       Initial Jobless Claims (JUL 16) A 253K | C 271K | P 254K

USD       Philly Fed Manufacturing Index Jul A -2.9 | C 5 | P 4.7

USD       House Price Index M/M May A 0.20% | C 0.40% | P 0.20%

USD       Existing Home Sales Jun A 5.57M | C 5.48M | P 5.53M | R 5.51M

USD       Leading Indicators Jun A 0.30% | C 0.20% | P -0.20%

USD       Natural Gas Storage A 34B | C 39B | P 64B

Good Luck,

Andy

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